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    Hi all. I've been working at M&S for about two to three weeks now, and am presumably going to paid within the next fortnight. This has made me wonder how much tax I am going to have to pay. I'll be earning roughly £220 a week, so it'll be about £40-45. Could someone confirm this please? Thanks.
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    It depends on your tax code etc and I presume your on the PAYE scheme - if so:

    The weekly tax threshold is around £124 per week @ 20%. Therefore you will be taxed on £95ish.

    So you're looking at £19 tax per week and £12 National Insurance. Per week ~ £31

    If you earn below the £6,475 tax free amount you can claim it back at the end of the tax year though.

    Reference: www.listentotaxman.com
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    For the first month, you'll probably be charged the average. it'll go down once the HMC receive their papers. If you earn under £6475 a year (www.hmrc.gov.uk/incometax/codes-basics.htm)
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    Firstly, I do not know if there is any way of getting out of paying national insurance, which means you will have to pay 11% of everything you earn over £110 per week irrespective of your tax situation; £12.10 per week.

    Since you have not been paid yet there may still be time to submit a P38(S) form, which basically prevents PAYE deducting any income tax from your pay packet; as long as you are only working during the holidays, and not earning over £6475.

    You can also fill in a R85 form, which stops you paying tax on interest you earn on your bank account; this is fairly pointless given that most bank accounts have very low interest rates on their student accounts but RBS send this form with their application pack when you open an account. I do believe HSBC give quite a fairly decent interest rate when you are not in your overdraft; I doubt this would work for savings accounts though.

    If you do work part-time during outside of the summer holidays, though, then you will have to claim you your tax back with a P50 form. The system does not realise you are a student unless you tell them so they will assume your earnings are £10,560 (£220 x 52), which means you will pay 20% tax on £4085 (10560 - 6475); £817 a year, or £15.72 per week.

    I am not sure how I managed to get different figures to Something. But you will have £27.82 deducted per week.
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    (Original post by evantej)
    Firstly, I do not know if there is any way of getting out of paying national insurance, which means you will have to pay 11% of everything you earn over £110 per week irrespective of your tax situation; £12.10 per week.

    Since you have not been paid yet there may still be time to submit a P38(S) form, which basically prevents PAYE deducting any income tax from your pay packet; as long as you are only working during the holidays, and not earning over £6475.

    You can also fill in a R85 form, which stops you paying tax on interest you earn on your bank account; this is fairly pointless given that most bank accounts have very low interest rates on their student accounts but RBS send this form with their application pack when you open an account. I do believe HSBC give quite a fairly decent interest rate when you are not in your overdraft; I doubt this would work for savings accounts though.

    If you do work part-time during outside of the summer holidays, though, then you will have to claim you your tax back with a P50 form. The system does not realise you are a student unless you tell them so they will assume your earnings are £10,560 (£220 x 52), which means you will pay 20% tax on £4085 (10560 - 6475); £817 a year, or £15.72 per week.

    I am not sure how I managed to get different figures to Something. But you will have £27.82 deducted per week.
    £220*52=£11,440 :p:

    In fact, (assuming that you gave M&S a form P45 or P46 when you started, and that this is your only income so far this year) you'll probably find that you won't have any income tax deducted from your earnings for a while (National Insurance Contributions at 11% above £110 per week will still be deducted). Something's numbers above would be correct in you were looking at the first week of the tax year (which starts on 6 April each year).

    However, the Pay As You Earn (PAYE) systems works on a cumulative basis. This means that your annual tax-free 'personal allowance' (currently £6,475) is time-apportioned across the year. As an example, suppose you start earning £600 per week in the fifth week of the tax year. Up to the end of the week, you will have built up a personal allowance of £6,475*(5/52)=£623. In that week, you'd therefore pay tax on only £623-£600=£23. Basic rate tax on this at 20% would then be £5.

    By the end of the sixth week, the allowance would be £747, but you'd then have earned £1,200 in total. You'd therefore pay tax on £1,200-£747=£453. Again at 20% this would be £91. Deduct tax previously paid to give £86 deducted this week.

    Seventh week - allowance = £871, total earnings = £1,800. Working it through, tax payable to date should be £186, with £186-£91=£95. From this point on, weekly income tax deductions will be constant at £95 assuming constant income. In general, the amount of tax payable each week will remain constant from the third period shen a non-zero amount is deductible.

    Hopefully you get the idea from this (the same principle applies to monthly income). The first thing you should check to make sure you're paying the right amount of tax is your tax code, which will be on your payslip. If it's "647L" then you've been treated as having the standard personal allowance of £6,475, which is most likely correct. If it's "BR" then no personal allowance will be included in the calculation of income tax deductions, and you'll be overpaying tax (assuming this is your only income). If you need to get this corrected, give your tax office a call - contact details will be on your payslip or here.

    It's not especially easy to explain how the cumulative calculation works - post again if you'd like any further clarification.

    Oh, and the advice about the R85 and P38(S) forms is still good, provided you're earning less than £6,475 in this tax year (6 April 2009 - 5 April 2010). As above, you must be a student employed only during holiday periods to be able to use the P38(S).
 
 
 
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